OREANDA-NEWS. April 13, 2010. X5 released its 1Q10 trading update, posting net sales of RUB75.75bn, a 20% increase YoY. The rise in LfL sales (+7%) was on par with 4Q09, reported the press-centre of OTKRITIE FC.

View: X5’s top line rose 36% YoY in USD, which is slightly below our annualized forecast of 40% growth, though 1Q is normally the low season for retailers. The overall Russian food retail sector added 10% in nominal terms during January-February 2010. While a 7% rise in LfL sales is slightly below the food retail growth (due to X5’s supermarket segment performance, which posted -6% LfL), it should still be the highest among Russian retailers. The discounter’s LfL performance was +17% YoY, which contributed significantly to the company’s overall performance. We expect the supermarket segment to recover later this year. 

Valuation: X5 trades on a 2010 EV/EBITDA of 11.1x, which is a 7% discount to EM peers.  

Action: We see the news as marginally positive and reiterate our BUY rating for the stock.